What Can We Learn from Short-Lived Startups

The truth is more businesses fail than succeed. Every entrepreneur knows that. However, every business owner can learn from the failures of other organizations. What separates Yugo from Ford Motor Company? What’s the different between Pan Am and Southwest Airlines? Their stories can teach us something.

Bloodhound had everything going for it. TechCrunch once hailed the tradeshow app as “genius” and Peter Thiel led a $3 million investment round in the “blowing up” company. So when a landlord drove out a popular arts collective from its home in the heart of the San Francisco’s Mission District, Bloodhound was quick to sign as the new tenant. Fifteen months later, the company is out on the street and being sued for unpaid rent.

The company’s rapid fall serves as cautionary tale of the consequences a startup faces when it aggressively burns through their funding. But it also shows what can happen to a neighborhood when landlords chase the high rents paid by venture-fueled tech companies.

Be aware of emerging trends that could threaten your model

Soldsie is a service for merchants that lets them peddle their products directly on Facebook or Instagram. Users see a product photo they want, write “SOLD” in the comments, and Soldsie processes the transaction. It’s a novel idea, and one that has attracted $5.6 million in venture capital money from the likes of 500 Startups and First Round.

But Facebook unveiled their “Buy” button last week, rendering the startup’s business mostly obsolete.

Make sure your idea isn’t fundamentally flawed

Some things are too precious to last in this brutal world, and Washboard, a startup that mailed you quarters to do your laundry, is one of them. It is, against all odds and after only a week in business, shutting down.

To quote from the Gawker comments section: “Reading this gave me an idea for a brilliant invention, a machine that will take your paper money and exchange it for quarters on-site. They could be put in every laundromat in the city.”

1 Comment

I feel that the most prominent cause of new companies failing is the third issue regarding ideas being fundamentally flawed. In my experience I have found that many entrepreneurs are so closely wrapped in their idea that it is very difficult to see even the most glaring faults. I have also been a victim of this but thankfully some very helpful people allowed me to see my mistakes.